Funding crisis hits mortgage lender

Britain’s third-biggest buy-to-let mortgage lender is planning to sell off loan assets to stave off a funding crisis, it was reported yesterday.

Specialist lender Paragon is looking at the sale of £140 million (€195m) of car loans to avoid asking shareholders for £280m in an emergency rights issue, the Sunday Telegraph reports.

Paragon warned investors last week that it faced funding uncertainties following the summer credit crunch, causing its share price to tumble.

The company has a £280m corporate lending facility due for repayment next February, but the renewal terms offered by Paragon’s banks are so poor following the debt squeeze that the lender has put investment bank UBS on stand by to underwrite the emergency rights issue.